The
ice at U.S. Citizenship and Immigration Services (USCIS) of the U.S. Department
of Homeland Security) broke in a big way in 2005 because this visa program
was being grossly underutilized. For a full decade prior to this
change, many less wealthy foreign nationals were able to file for "employment-creation"
visas, and visa and investment consulting firms fed the hype and hoopla
by signing up hundreds of foreign national investors to "limited partnership"
arrangements, only to find out that legacy Immigration and Naturalization
Service was uncooperative. This
was not what Congress had in mind, and the enthusiasm for these arrangements
died quickly. The EB5 visa petitions ran into trouble in Washington because
they used primarily U.S. debt rather than foreign capital, and there were
complexities in the partnerships that masked the fact that the jobs required
to be saved or "preserved" under the regulations were probably never there.
These "funny money" schemes began to get bureaucrats' serious attention
as 1997 dawned and a flurry of decisions by the immigration service in
1998 almost killed this visa program. I
advise my clients to make direct investments through a designated Regional
Center in order to show the creation of 10 U.S. jobs -- either directly
or indirectly -- per $500,000 minimum investment.

Background

The
"employment-creation" immigrant visa program was one of the "ugly ducklings"
of the U.S. Immigration Act of 1990, which authorized 10,000 immigrant
visas to "employment-creation" investors (also called the "EB5" program).
There were few takers. Canada's investment visa programs were much more
favorable, relatively risk-free. Canada's immigrant investor visa programs
ate our lunch. Vancouver might as well be called "Little Hong Kong" due
to the large number of Chinese investors who fled there from Hong Kong
and mainland China. Despite
the apparent weaknesses in the visa program, Congress renewed it 1994,
and again in 1997. Nobody was really sure why. But consulting firms, backed
by persuasive business immigration lawyers, literally re-made the program,
changing federal regulations by careful negotiation with then-INS as they
went. The
immigrant investor visa category is for prospective immigrant investors
who hire (or show proof of plans to hire) at least 10 U.S. workers. The
business must have been established (i.e., the investment must be made)
after November 29, 1990. The
first step is for the prospective immigrant investor to file a petition,
requesting that USCIS make a determination that the petitioner has invested
(or is actively in the process of investing) lawfully obtained capital
in a new commercial enterprise in the United States which will create full-time
positions for not fewer than 10 qualifying employees. For
establishment of a "new" commercial enterprise in a "targeted employment
area," the amount of capital necessary is a minimum USD 500,000.
The timetable depends upon the individual petitioner and the backlogs experienced
by USCIS. USCIS Service Centers have been giving hundreds of these visa
petitions careful scrutiny. Guidance from USCIS and Board of Immigration
Appeals decisions is confusing. Some of these "partnership" arrangements
turned out to be high risk ventures for many unfortunate people. The
original 45- to 90-day timetable for approval of these visas stretched
to six months, then to nine, then to more than a year. Also, processing
delays became the number one problem, and disappointed investors sued their
lawyers who were not responsible for government inaction or bad faulty
adjudications.

What is required

The
administrative requirements concern the documentation (articles of incorporation,
certificate of merger or consolidation, partnership agreement, certified
financial reports or audits, stock purchase agreements, payroll records,
etc.) that would support a petition to be classified as an "alien entrepreneur"
and possible examination of investment income sources by the Internal Revenue
Service. It is possible to help this process along by calling on congressional
support from Washington, D.C., particularly if new jobs are involved for
the congressman's district. Approval
of the investor immigrant visa entitles the holder of an immigrant visa
to conditional permanent resident alien ("green card" holder) status for
him and each member of his immediate family, including children younger
than 21 years old. The
rule is that the investor must show that he has invested or is "actively
in the process" of investing the required amount (minimum USD 500,000 capital
for targeted employment areas, or $1 million elsewhere). USCIS defines
"invest" as contributing capital. "A
contribution of capital in exchange for a note, bond, convertible debt,
obligation, or any other debt arrangement between the alien entrepreneur
and the new commercial enterprise does not constitute a contribution of
capital." The petitioner must show that the new commercial enterprise has
been established, and that the required amount of capital has been transferred,
and that the investment has resulted in a substantial increase in the net
worth or number of employees of the business (minimum 10 U.S. workers employed). There
are many ways to document what the government wants, but the rules say
that the visa petitioner must provide documentary evidence that the required
amount of capital has been placed "at risk" for the purpose of generating
a return on the capital. "Evidence
of mere intent to invest, or of prospective investment arrangements entailing
no present commitment will not suffice to show that the petitioner is actively
in the process of investing. The alien must show actual commitment of the
required amount of capital." And
that was always the biggest problem with the employment-creation visa program:
Prospective investors (whether large or small) wanted to know what they
were getting for their money, and a "green card" was actually secondary
to preserving their investment. Speculators and entrepreneurs are used
to taking risks, but not "mom-and-pop"operations, which, it turned out,
were the most likely investors, if for the only reason that they wanted
to move to the United States to put their children in school here. The
establishment of a new commercial enterprise may be used as the basis of
a petition for classification as an alien entrepreneur by more than one
investor, providing that each petitioning investor has invested or is actively
in the process of investing the required amount for the area in which the
new commercial enterprise is principally doing business, and provided that
each individual investment results in the creation of at least 10 full-time
positions for qualifying employees. Establishment
of a new commercial enterprise may consist of (1) the creation of an original
business, (2) the purchase of an existing business and simultaneous or
subsequent restructuring or reorganization such that a new commercial enterprise
results, or (3) the expansion of an existing business through the investment
of the required amount, so that a substantial change in the net worth or
number of employees results form the investment of capital. "Substantial
change" has been defined as a 40 percent increase either in the net worth,
or in the number of employees, so that the new net worth or number of employees
amounts to at least 140 percent of the pre-expansion net worth or number
of employees. Other, less stringent, criteria apply to an investor who
attempts to rescue a business that is in financial trouble. The
lower investment threshold of $500,000 to $1 million is not available in
many states, but it became available in Alabama on July 6, 1995, when the
Governor notified then-INS of Alabama's designation of the Alabama Department
of Economic and Community Affairs (ADECA) to make determinations of high
unemployment areas, called "targeted employment areas", for such investments. I
was pleased to have played a role in obtaining that approval from the Governor.
I wish I could report that the visa program is being widely used in Alabama,
but that is not the case. Alabama is a poor state and cannot afford to
ignore foreign investment, whether it's from Missoula or Marrakesh.
I will continue to work with any and all Alabama economic development officials
to enable the state to take advantage of this investor visa program.

Reversal of fortune

Immigration
lawyers are nothing if not patient. Nearly five years after the "employment-creation"
visa program was signed into law, then-INS began approving some limited
partnerships that protected petitioners' investment capital while placing
much less of it at risk. These limited partnerships could show that
the entire minimum amount ($500,000) had been put up by structuring the
deal with credit from U.S. banks. In some of these kooky arrangements,
as little as $100,000 was put into a U.S. business. Almost as much,
or more, went into investment setup costs, and fees to the brokers and
lawyers and bankers. The rest was placed in irrevocable trusts and invested
corporate bonds and commercial paper. Overnight,
it seemed, immigration consultants and financial counselors were scouring
the planet, looking for foreign investors, and not necessarily the entrepreneurs
Congress envisioned when it passed the "employment-creation" visa program.
Instead of wealthy entrepreneurs, these new structured arrangements were
creating demand for the 10,000 annually allocated visas among "mom and
pop" investors who signed up with the consultants and brokers in greater
numbers. But
it was too good to last. Eventually, the bureaucrats at then-INS
began asking questions about the limited partnership arrangements, and
hundreds of "employment-creation" visa petitions were held up. Former
INS Commissioner Doris Meissner assigned "tiger teams" to examine the EB5
cases when the EB5 program had nearly been run into the ground by financial
consultants, lawyers, and the bureaucracy itself. The risk for these
unlucky petitioners, it turned out, was not in placing their foreign capital
in the hands of the immigration consultants and brokers, but in believing
that the consultants and brokers knew what they were doing and could deliver
on their promises. The
advice my clients receive from me is based upon sound legal principles
and careful regulatory analysis, with one trained eye on the federal bureaucracies
and with an index finger aloft, testing the political winds. I never
advise my clients to take a risk that is not based upon a fair likelihood
of success. For information about investing in Alabama, or for a
list of Regional Centers that USCIS has designated for approved investing
opportunities in the lower category of $500,000, rather than $1 million
direct investment, please call (334) 832-9090. This immigrant visa
procedure still has problems and is far too complicated -- and ignores
business realities in most cases -- but it is still possible to use it
if the investment can be properly structured and documented. Meanwhile,
Canada's program has been an enormous success, primarily because of government
involvement and the lower 200,000 Canadian dollar investment minimum.
I still use the EB2 immigrant visa category for aliens of exceptional
ability, and the EB1 category for multinational executives, and will continue
to warn those who consult me about the complexities of the
"employment-creation" visa program, and to make direct investments through a
USCIS-designated Regional Center, such as America's
Center for Foreign Investment, L.L.C.

WARNING:
Your friends, family, fellow employees, and business associates are good
sources of bad information about U.S. immigration law and procedures. You
should find and hire a qualified immigration lawyer to guide you and help
you with a change in visa status or immigrant visa. If you do not know
a qualified immigration lawyer, call the American Immigration Lawyers Association
(AILA) in Washington, D.C., toll-free 1-800-954-0254.

Boyd
F. Campbell is a member of the American
Immigration Lawyers Association (AILA) and the Alabama
State Bar. He is former Chair of the Immigration Law Committee
of the ABA's General Practice, Solo & Small Firm Lawyers Section and
served as Co-Chair of the Immigration Law Committee of the ABA's Labor
and Employment Law Section. He was a member of the ABA's Coordinating
Committee on Immigration Law from 1994 to 1998, and served as Chair of
the International Law Section of the Alabama State
Bar from 2000 to 2002. He has practiced private international law,
international labor and employment law, and immigration and nationality
law in Montgomery, Alabama, since 1988. In August, 2001, Mr. Campbell
was appointed Alabama's first practicing civil
law notary by the Alabama Secretary of State. In 2006, he
accepted the position of General Counsel of America's
Center for Foreign Investment, L.L.C. ,
America's largest Regional Center.

Questions and comments
about this article may be directed to:Immigration
Law Center, L.L.C.P.O. Box 11032Montgomery, Alabama 36111-0032
USA